Enterprise Group Announces Results for the Second Quarter of 2017

ST. ALBERT, Alberta, Aug. 11, 2017 (GLOBE NEWSWIRE) -- Enterprise Group, Inc. (“Enterprise,” or “the Company”) (TSX:E) is pleased to announce its financial results for the three month period ended June 30, 2017 (the “second quarter”).

Consolidated:

Three months June 30, 2017

Three months June 30, 2016 restated(2)(3)

Six months June 30, 2017

Six months June 30, 2016 restated(2)(3)

Revenue

$7,071,643

$4,993,477

$15,949,692

$13,845,654

Gross margin

$843,300

$191,153

$3,469,581

$3,028,754

Gross margin %

12%

4%

22%

22%

EBITDA(1)

$102,892

($548,502)

$1,867,992

$1,444,636

Loss before tax

($2,088,524)

($2,961,272)

($2,128,142)

($4,518,845)

Net (loss) income

($1,587,305)

($2,399,765)

($1,637,931)

($3,826,389)

EPS

($0.03)

($0.04)

($0.03)

($0.07)

Identified and defined under “Non-IFRS Measures”.

In July 2016, the Company closed a transaction to divest substantially all the assets of TCB. The net operations of TCB, including the prior period, are presented as a single amount in the consolidated statements of loss and comprehensive loss.

In December 2016, the Company decided to cease all operations relating to single pass tunneling. The net operations of this line of business, including the prior period, are presented as a single amount in the consolidated statements of loss and comprehensive loss.

Revenue for the three months ended June 30, 2017 of $7,071,643 increased by $2,078,166 compared to the prior period. The increase was partially from customers moving projects Q1 to Q2, and more customer activity in Northeastern B.C. The increase in gross margin and EBITDA for the three months ended June 30, 2017 is from increased activity over the comparative period. Revenue for the six months ended June 30, 2017 of $15,949,692 increased by $2,104,038 compared to the prior period. The increase was primarily from more customer activity. Enterprise continues to take numerous measures to diversify its customer base and reduce the Company’s cost structure while maintaining service levels to retain customers. Gross margin for the six months ended June 30, 2017 remained consistent at 22% compared to the prior period. The increase in EBITDA for the six months ended June 30, 2017 of $423,856 is primarily from a higher dollar value of gross margin combined with reductions in interest charges and general and administrative expenses when compared to the prior period.

Over the last 18 months, the Company has made significant improvements to its statement of financial position and overall total debt. At June 30, 2017, after adjusting for goodwill and deferred taxes, the Company has assets in excess of total debt of approximately $49,000,000. Enterprise will continue to look for opportunities to improve its financial position and opportunities that will allow the Company to diversify and expand.

In July 2016, the Company closed a transaction to divest substantially all the assets of T.C. Backhoe & Directional Drilling Ltd. (“TCB”). TCB provided directional drilling and installation of underground power, telecommunications and natural gas lines to the utility infrastructure segment. Gross cash proceeds from the transaction was $16,890,400 plus $2,951,798 of working capital for a total of $19,842,198. All proceeds from the transaction were deployed towards reducing the Company’s debt. On July 14, 2017, the Company received the final payment of $650,000 plus net working capital adjustments of $209,993. The entire amount was applied against the Company’s debt.

During the fourth quarter of 2016, Enterprise decided to cease operations of its Enterprise Trenchless Crossings operations (“ETC”) and focus on the core tunneling services provided by Calgary Tunnelling. ETC’s focus was on single pass tunneling jobs using specialized equipment the Company purchased in 2014. Project delays, price reductions and compressed margins have increased the overall risk associated with this line of business.

Management is beginning to experience a meaningful increase in activity from its existing customers coupled with a substantial surge in new customers which has resulted in increased market share for its business units. As evidenced by this most recent quarter, management’s efforts to streamline and maximize efficiencies are translating into improved margins quarter after quarter. Management feels that Enterprise is within a very select group of producers and service providers that have adapted their organizations to operate successfully in the current commodity price environment. Management believes that Enterprise is well positioned due to the diversity of its business and operational performance. Management also believes that a balanced and diversified position between infrastructure and utilities construction and specialized equipment rental is the best path to generating shareholder value.

About Enterprise Group, Inc.Enterprise Group, Inc. is a consolidator of construction services companies operating in the energy, utility and transportation infrastructure industries. The Company’s focus is primarily construction services and specialized equipment rental. The Company’s strategy is to acquire complementary service companies in Western Canada, consolidating capital, management, and human resources to support continued growth. Enterprise acquired of Artic Therm International Ltd. in September 2012, Calgary Tunnelling & Horizontal Augering Ltd. in June 2013, Hart Oilfield Rentals in January 2014, and Westar Oilfield Rentals Inc. in October 2014. More information is available at the Company’s website, www.enterprisegrp.ca. Also, today’s filings can be found on www.sedar.com

Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or the Company’s future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Company disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Non-IFRS Measures

The Company uses International Financial Reporting Standards (“IFRS”). EBITDAS is not a measure that has any standardized meaning prescribed by IFRS and is therefore referred to as a non-IFRS measure. This news release contains references to EBITDAS. This non-IFRS measure used by the Company may not be comparable to a similar measure used by other companies. Management believes that in addition to net income, EBITDAS is a useful supplemental measure as it provides an indication of the results generated by the Company’s principal business activities prior to consideration of how those activities are financed or how the results are taxed. EBITDAS is calculated as net income excluding depreciation, amortization, interest, taxes and stock based compensation.